Traditional Agencies Outperform Mega-Agencies, OTAs, ARC Says Jul 24th 2013, 18:00
Traditional travel agencies, which include brick-and-mortar shops and home-based agents who write air tickets, are outperforming mega-agencies and online travel agencies (OTAs), according to ARC.
For the month of June, air sales totaled $1.8 billion for mega-agencies, $2 billion for OTAs and $3.2 billion for “other” agencies, which include traditional travel agencies, according to ARC. In fact, the “other” category has shown strong performance relative to the “mega” and “OTA” categories in terms of revenue over the last 12 months, Chuck Thackston, ARC’s managing director, data research and analytics, told TravelPulse.
ARC looked at other data to see what was causing this trend. “What popped out was that international travel is outperforming travel as a whole,” he said. “This tends to mean that leisure travel is relatively strong, compared to the overall travel market.” And leisure travel is represented “fairly strongly” in that “other” category.
“If you’re taking a vacation to an international destination, you want a travel agent helping you,” he added, referring to complex itineraries, visa requirements and other components that agents can help clients with. “Because international travelers will want the help of travel agents, international travel is showing strong.”
Conversely, he added, the “mega” category primarily consists of large agencies that focus on corporate travel, and “that segment of the market has been relatively flat.”
In addition, OTAs compete very strongly with airline websites, according to Thackston. “Airlines tend to compete very aggressively with their OTA partners, and airlines will benefit from sales made on their own websites and OTA websites.”
Traditional agencies are not impacted as much by corporate travel and airline websites. While traditional travel agencies also compete with airlines, “they’re also able to offer more personal service and are able to help someone navigate through a complex international itinerary,” he said.
Thackston said that, while it’s hard to predict how the revenue numbers will fluctuate in the future, “we have seen somewhat of a flat overall travel market this year, and we expect to see a flat or soft market for the rest of 2013, at least.” Even with the amount of volatility in segmentation, however, the trend is that the “other” category is continuing to outperforming both mega agencies and OTAs. But mega-agencies may challenge traditional agencies, as the economy strengthens and corporate travel bookings increase, he said.
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